Net Unrealized Appreciation (NUA)
retirementAlso known as: NUA, net unrealized appreciation, employer stock NUA strategy
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
Eligibility: lump-sum distribution of the entire 401(k) balance in a single tax year, triggered by separation, age 59½, disability, or death. Stock must be transferred in-kind to a taxable brokerage. Example: $50K cost basis, $300K current value → pay ordinary income tax on $50K now, then sell anytime for LTCG on the $250K appreciation (NUA gets LTCG treatment from day one — no 1-year holding period needed). Future appreciation after the in-kind transfer requires the standard 1-year hold. Underused because most advisors default-recommend full IRA rollover. Most valuable when basis is low relative to current value.
Use these calculators to apply this concept
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